Average mortgage hit record highs during third quarter

The average mortgage in the third quarter of this year surpassed levels seen during the peak of the market in 2008, a new report from the Banking & Payments Federation Ireland (BPFI) shows.

BPFI has published the latest figures from its mortgage drawdowns report for the third quarter and its mortgage approvals report for September 2022.

Overall, the reports show continued growth in both mortgage approvals and drawdowns in the third quarter driven by a further jump in mortgage switching.

However September’s approvals figures show the pipeline for home purchase mortgages is weaker than earlier this year.

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Notably the report also shows that the average homebuyer mortgage stood at €284,623, surpassing levels seen during the peak of the market (€268,220 in the first quarter of 2008).

A total of 14,851 new mortgages to the value of €4 billion were drawn down by borrowers during the third quarter.

This represented an increase of 29.4 per cent in volume and 45.7 per cent in value on the corresponding third quarter of 2021.

First time buyers remained the single largest segment by volume (44.3 per cent) and by value (43.9 per cent).

Non-purchase mortgage activity, which includes switching and top-ups, grew by 115.8 per cent in volume terms year on year to 5,081 and by 175.8 per cent year-on-year to €1.3 billion over the same period.

The average mortgage drawdown value for home mortgages, €284,623, again set new records.

The average first time buyer mortgage drawdown jumped to €270,568 in the quarter from €243,271 a year earlier, while the average mover purchase drawdown rose to €315,463 from €284,836 over the same period.

In addition, BPFI also published the latest figures from the mortgage approvals report for September.

A total of 5,350 mortgages were approved in September 2022 – some 2,460 were for first time buyers (46 per cent) of total volume) while mover purchasers accounted for 1,063 (19.9 per cent).

The number of mortgages approved in September fell by 3.5 per cent month-on-month and rose by 12.2 per cent year-on-year.

Mortgages approved in September were valued at €1.5 billion – of which first time buyers accounted for €665 million (45.2 per cent) and €345 million by mover purchasers (23.4 per cent).

The value of mortgages approved in September fell by 3 per cent month-on-month and rose by 22.1 per cent year-on-year.

Non-purchase mortgage activity, which includes switching and top-ups, grew by 98.7 per cent in volume terms year on year to 1,717 and by 140.2 per cent year-on-year to €443 million over the same period.

BPFI chief executive Brian Hayes said the figures reflect the fact that mortgage customers “are seeking out better rates in the wake of the interest rate increases recently announced by the ECB”.

“Approvals continued to grow in September with this growth driven by the high level of switching which is currently underway and likely a response to recent ECB decisions to increase interest rates,” he said.

Goodbody economist Dermot O’Leary said mortgage lending “came in well ahead of our expectations in the third quarter due to a boom in re-mortgaging activity”.

“We upgrade our gross lending forecasts as a result, but note that lending volumes for house purchase are expected to stall due to supply constraints and slower economic growth,” he said.

“We are now forecasting that gross lending will finish this year at €13.9 billion (€12.8 billion previously), growing to €15.5 billion in 2023 (€13.7 billion previously).

“Higher re-mortgaging is the main contributor to this revision. We estimate that re-mortgaging will account for 27 per cent of new lending in 2022 and 31 per cent in 2023, a record high.

“We expect 5 per cent growth in the value of mortgage lending for house purchase, with most of this stemming from higher loan sizes.”